Bloggers, Celebs Must Reveal Pay for Endorsements or Else

New FTC guidelines impose fines for infractions that could reach as high as $11,000 per incident.

WASHINGTON, D.C—The Federal Trade Commission on Monday published its final guidelines for advertisers on how to keep endorsement and testimonial ads in line with the Federal Trade Commission Act.

While not binding law themselves, the guidelines are administrative interpretations of the law intended to help advertisers comply with the act.

Under the newly revised FTC Guides Concerning the Use of Endorsements and Testimonials in Advertising, “Advertisements that feature a consumer and convey his or her experience with a product or service as typical when that is not the case will be required to clearly disclose the results that consumers can generally expect,” the agency disclosed in its statement. “In contrast to the 1980 version of the Guides—which allowed advertisers to describe unusual results in a testimonial as long as they included a disclaimer such as “results not typical”—the revised Guides no longer contain this safe harbor.”

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This is the first time the FTC has directly addressed the increasingly controversial issue of whether and when bloggers should reveal receipt of payment for making endorsements.

"Given that social media has become such a significant player in the advertising area, we thought it was necessary to address social media as well," said Richard Cleland, assistant director for the division of advertising practices at the FTC.

“The revised Guides specify that while decisions will be reached on a case-by-case basis, the post of a blogger who receives cash or in-kind payment to review a product is considered an endorsement,” the FTC says. “Thus, bloggers who make an endorsement must disclose the material connections they share with the seller of the product or service. Likewise, if a company refers in an advertisement to the findings of a research organization that conducted research sponsored by the company, the advertisement must disclose the connection between the advertiser and the research organization. And a paid endorsement—like any other advertisement—is deceptive if it makes false or misleading claims.”

Celebrities also are addressed in the new guidelines, which make advertisers and endorsers newly liable for false or unsubstantiated claims made in an endorsement—or for failure to disclose material connections between the advertiser and endorsers. “The revised Guides also make it clear that celebrities have a duty to disclose their relationships with advertisers when making endorsements outside the context of traditional ads, such as on talk shows or in social media.”

Lobbyists are also now required to disclose their financial ties to studies by research institutes that they fund and cite to promote their positions.

According to the Washington Post, this is the first time the FTC had updated its endorsement policies in three decades.

While the attention given this issue is likely the result of pressure put on the agency by groups concerned about non-transparent relationships between some bloggers and corporations, the new rules could have a significant impact on the manner in which adult bloggers go about their business and the extent to which they reveal payment or consideration for endorsements.